What to Expect at CES 2012

The 2012 International Consumer Electronics Show (CES) will be the BIGGEST ever, with 1.6 million square feet of show space from over 2,500 exhibitors and with a forecasted 150,000 attendees.  Continuing the trend of recent years, the “convergence” of content, technology and telecoms is ever-present at CES.  At this point the exhibition could be renamed the ConsumerEcosystem Show, because phones, tablets, TVs and other devices are all converging to glass, casing and processing, while the underlying and connecting ecosystems are what differentiates them.

Despite the fact that CES is the biggest technology show of the year, several of the leading technology players do not directly participate.  The BIG 3 Ecosystem player, Apple, Google, Amazon, as well as Hewlett-Packard will continue their practice of not exhibiting.  Next year Microsoft will join their ranks after delivering 14 of the opening night keynote addresses since 1995.  As CES has grown, so have the costs of participating and it is often easier to make a distinctive brand and product splash at smaller events.

Nonetheless, CES remains the single greatest show to observe technology trends and what to expect in the coming years.  Here’s my perspective on the Top Ten things to expect at the 2012 CES:

1. Google Inside: While Google will not have a booth, we’ll see Google inside a wide range of products, most notably tablets running Ice-Cream Sandwich, Android phones and Google TVs.  A number of television manufacturers have developed Android-powered TVs, and Android apps now run on Google TV.
2. Steve Ballmer pulls a “Jerry Seinfeld”: The iconic TV show had the wisdom to go out on a high note, and it looks like Ballmer and Microsoft will unveil a range of products and partnerships that will leave the audience waiting for more following Microsoft’s final year as an exhibitor.  Microsoft is expected to display some combination of a number of exciting new products, including a new gaming console (that may or may not be called XBox 720).  The new console is rumored to have an AMD processor, a Blu-ray disc drive, Windows 8 compatibility, and deeper Kinect integration than the Xbox 360. In addition Microsoft will make announcements regarding Windows 8 tablets, and Win – Nok phones.  Nokia will debut new Windows Phone 7 phones designed for U.S. networks..  T-Mobile’s version of the Lumia 710 started shipping last week, Nokia will introduce a version for AT&T’s 4G LTE network at the show.
3. Battle of the Superlatives - Superphones and Ultrabooks: This year, we expect to see superphones with quad-core CPUs, LTE-enablement, HD displays, 12+ MP cameras. In addition, many devices will incorporate NFC (near-field communication), helping to drive adoption of mobile payments in 2012.  Quad-core processors will not only improve the overall performance of smartphones, but also will aid in things like video playback and help phones keep up with 4G LTE networks. The launch of ultrabooks is largely based on Apple envy in notebook manufacturers attempting to catch up with the Macbook Air.  While certain manufacturers are stretching the Ultrabook label, the general idea is lighter, thinner notebooks with solid state drives that enable near-instantaneous boot-up.  Intel is providing the underlying marketing push for Ultrabooks with Dell, Lenovo, Samsung, HP, and others will all releasing Ultrabook products.
4. TVs Get Sexier and Smarter: While no truly new capabilities will be introduced on the level of connected TVs or 3D, manufacturers will unveil a range of feature improvements making TVs bigger, thinner, and better.  LG is expected to show an 84-inch monster with nearly 4 times the resolution of current HD, i.e. “4K”, as well as a 55-inch OLED that is only 0.16 inches deep.  TV control also will be a significant theme, leveraging smartphones, verbal commands (like Siri), and gestures (like Kinect).  In addition, every new television or set-top box that boasts a smart TV interface is essentially a platform for app use and discovery, and all of the major TV manufacturers now have a “connected TV” platform that plays host to widgets for Netflix, Amazon, Pandora, Twitter, and similar content sources.
5. OTT Overload: Over-the-top content delivery has continued its rapid growth path, and we can expect a slew of OTT-related product and content deals at this year’s show.  For example, Boxee will promote its shift to a STB strategy and Roku will promote a new “Streaming Stick” device, as well as content deals, as it attempts to grow its subscriber base.  In a sign that OTT has truly gone mainstream, expect a number of announcements from MVPDs regarding their own OTT offerings, as they extend TV Everywhere offerings across platforms and devices as a means of protecting their subscriber bases.  Comcast will also show Skype TV.
6. Clouds Over Las Vegas: Following cloud offering debuts by Apple, Google, and Amazon in 2011, expect more cloud announcements and integrations at CES 2012.   Having all types of content available on demand across a wide range of devices is increasingly practical.  As an example, we may see cloud music integrated with home theater systems.  While online music fans gained cloud music storage services from Amazon and Google on their PCs and smartphones in 2011, support for those services on home theater devices has been limited to date.  We may see Amazon Cloud and Google Music apps for Blu-ray players and streaming video boxes this year.
7. Tablet Bipolarism: CES 2011 was all about tablets, but none of the devices shown a year ago put much of a dent in iPad sales.  This year there will be two elephants in the room with respect to the expected release of the iPad 3 in the spring, and the continued sales and functional improvements of the Kindle Fire.  Nonetheless, this year’s show will have interesting tablet announcements with a strong dichotomy.  On the high-end,  we will see expensive, powerful (quad-core) tablets on one side.  Several companies will likely showcase tablets based on Google’s Android 4.0 software, which unifies the smartphone and tablet versions in one operating system.  while on the other end of the spectrum cheap $100ish on the other.
8. Eureka!: More and more start-ups are participating in CES, and this year will feature a science fair of sorts,  called EurekaPark, that is supported by a partnership of the National Science Foundation, Startup America Partnership, CNET and UK Trade & Investment (UKTI).  Eureka Park will feature start-up companies and technologies that are emerging from R&D.  94 companies are signed up to showcase their works in a special section of CES 2012 at the Bellini Ballroom of the Venetian Hotel.
9. Home Automation goes main-stream:  We will see the idea of a “connected home” being taken to another level. Device and appliance manufacturers will show new, exciting capabilities for their hardware — developers will be show the software to complement them. Expect to see hardware-software combinations controlled by Android, and even cars that provide personalized features and services
10. The Next Big Idea: Will we see truly new, lifestyle-changing technology this year? Probably not. But we will see better, faster, smarter products across the board.

What to expect from iPhone 5?

Apple’s iPhone has been a huge success since it debuted in 2007.  The iPhone had transformed Apple into one of the world’s leading mobile device makers.  According to Nielsen, the iPhone’s U.S. market share in August was 28 percent, making it No. 2. Android was No. 1 with 43 percent of the U.S. market, Nielsen data show.

A new survey, conducted by the mobile advertising company, InMobi, notes that not only will 41 percent be flocking to the new device, the so-called “iPhone 5” (Apple’s official name has yet to be revealed), but that some 50 percent of those consumers will be buying it within the first six months of launch.  InMobi’s figures for the UK are close: 39 percent of UK consumers, with more than 48 percent of them in the first six months.

However, Apple now faces intense competition from some of the leading Android smart-phone, mainly from Samsung and HTC.  In order to compete with them, Apple is expected to make enhancements to its flag-ship phone product and even introduce other phone products.  So, what to expect from iPhone 5 (or what might be called iPhone 4S)?

• Faster Processor: The iPhone 5 is expected to run the A5 processor, the same processor as iPad 2.  In addition to faster speed, the A5 contains a dual-core ARM, which means that the iPhone will be able to do twice the work at one.  In addition, the iPhone 5 is expected to also have more RAM/memory.

• New Operating System: The iPhone 5 is expected to definitely run iOS 5, which is more cohesive, more beautiful and with more than 200 new features, including better user-interface with multi-touch gestures, an improved Notification system, as well as features such as News Stand and iMessage (Apple’s version of Blackberry’s popular BBM).

• Cloud-based services: The iPhone 5 is also definitely expected to support the iCloud service for wireless remote access of music from all computers and mobile devices. With iCloud, the iPhone5 will be able to automatically sync with the iCloud, which will allow users to store photos, apps, calendars and documents without having them to store in the phone’s memory.  Rumours also state that Apple might also release a low-cost “iCloud iPhone” alongside the iPhone 5 — iPhone Mini or iPhone Nano.

• Slimmer Look.  Perhaps a slightly larger screen: From a design perspective, the iPhone 5 will not be much of a departure from the 4, but it is expected to be a bit skinnier and feel better on your palm, against your face, and in your pocket.  It might also have a slightly larger screen with better display.

• Voice-Recognition Features: In order to better compete with Android’s popular Voice-Recognition features, the iPhone 5 is expected to have its own Voice-Recognition features, as well as a dictation app, the Assistant.  Apple has a deal with Nuance for its voice-recognition technology and it acquired a voiced-based personal assistant service Siri last year.

• Better Camera and Video: Again, in order to better compete with Android-based phones, the iPhone 5 is expected to have a much better, 8-megapixel dual-LED flash camera (instead of the 5-megapixel camera that the iPhone 4 has).  The iPhone 5 is also expected to be capable of taking pictures in Panorama, similar to the ’360 Panorama’ application in the App Store The iPhone 5 is expected to allow for full 1080p video recording.  In addition, Apple has filed several patent applications relating to 3D picture capturing in March, which means that at some point Apple is expected to also feature a 3D camera, capable of capturing, processing and rendering 3D images.

• 4G: While Apple CEO, Tim Cook, indicated that Apple is not a big fan of the battery life provided by current LTE chip designs, the iPhone 5 is expected to run on LTE networks and/or HSPA+ networks, which are being used by AT&T as a stopgap.

• Carriers: The iPhone 5 will definitely run on AT&T and Verizon, and eventually on Sprint and T-Mobile as well.

Netflix’s new move …

Few weeks ago, Netflix announced that it would split its business into two units: Qwikster for physical DVD distribution and Netflix for digital-only distribution of content.  

The only possible sane logic behind Netflix’s initial move to split the into two (physical DVD and digital-only) entities might have been a flawed assumption that the “sum of parts will be greater than the whole” and that at some point someone might buy the digital-only unit at a higher valuation. 

However, Netflix quickly realized that the strategy was flawed and is now reverting back to “status quo”   Three factors probably influenced this decision:

• Customer outrage
• Stock market’s negative reaction
• Competitive moves: 1. Dish Networks’ re-launch of Blockbuster; 2. Cable MSOs’ digital moves, such as Comcast’s deal with Microsoft Xbox

I believe Netflix is now doing the right thing. Given the dynamics in the cross-platform entertainment industry, entertainment content providers, whether Cable MSOs like Comcast or Over-the-Top providers such as Netflix, should focus on Customer Relationships and on becoming the sole provider of entertainment content to its customers, regardless of format, location or pipe.

Hulu: Dish Networks or Google!

As you know, Hulu has two serious contenders – Dish and Google.

Google has the highest bid at $4 billion.  However, the deal has various stipulations attached to it, mainly around more content, on more platforms, for longer periods of time.

Dish Network has a $1.4 billion offer with few (or no) stipulations.  Dish can augment its subscription based streaming service offering (Blockbuster) with Hulu’s Ad-Supported offering.  It also gets more TV content with Hulu.  This positions Dish as an even stronger competitor to Netflix.

None of the potential buyers apparently offered Hulu’s original $2 billion asking price with the conditions Hulu’s owners set.

Personally, I think Google is a better play for Hulu for two main reasons:

• Hulu is worth more to Google than it is for Dish.  Hulu can negotiate a deal that is richer than Google’s original $4B bid.  Google really needs to have a strong BIG “Premium Content” play.  So far, they have only embarked upon a number of small plays: 1. They acquired Next New Networks; 2. They hired former Paramount execs; 3. They are doing premium content deals w/ studios and networks.  However, these are all small plays – Hulu can help them get into the Premium Content business in a big way, which they, in turn can monetize much better than Hulu ever could – and across all their platforms.  The revenue potential and the strategic importance of this to Google is huge – specially, given the impending Motorola acquisition.
• In addition, Hulu’s content partners can also greatly benefit from this deal.  They can get long term licensing deals in place with Google – as part of and/or in addition to the Hulu deal.  Over the past few months, Google has been showing a much more “Content Owner Friendly” attitude.   I think this is very good for the entire industry.  If Google continues this “Content Owner Friendly” attitude, it can be a very strong partner for the studios and networks – with very large sums of dollars flowing from Google to the content owners.

I think it’s time for the media companies to embrace Google as a real player in this industry!

Apple and the Mobile Industry after Steve Jobs …

My views …

Steve Jobs is an industry icon – a true visionary and a strong leader – The Thomas Edison of our time.   I have the utmost respect for him and with him health and the very best.

However, between his stepping down as the CEO of Apple and the events in the mobile industry in the last 10 days, I think Apple will face challenges in maintaining its leadership.

Tim Cook is an operational genius.  However, he doesn’t have what Steve Jobs has – the vision – the ability to inspire ideas, innovation and perfection, both in its products and its people – which is what made apple “apple”.  While I agree that Apple will continue to do well without Mr. Jobs at its CEO, I’m not sure if it will be able to maintain the level of greatness that it attained under the tutelage of Mr. Job.  There is a difference in doing well and being great.   If you examine what happened with Pixar under Steve Jobs and after he sold it to Disney, you’ll see what I’m saying – while recent Pixar movies have done very well on the box-office, the earlier movies such as Toy Story 1, Monsters, Inc., Finding Nemo were truly great.

I believe that with the events over the last week and a half, the mobile device industry is at an inflection point and there is an opportunity for someone else to become #1.  With Google’s acquisition of Motorola and HP’s withdrawal of Web OS, we’ll be down to a three horse race in Mobile OS: Apple’s iOS, Google’s Android and Microsoft (I think RIM’s glory days are over).  However the game will be about controlling the end-to-end ecosystem – hardware, operating systems, software and the ecosystem, which is what Apple did exceptionally well. 

Potential Winners:

Google:

I believe that Google has a tremendous opportunity to emerge as a real winner from these events. Google already has beaten Apple in the US — Android powered 39 percent of U.S. consumer smart-phones in the three months ended in June, compared with 28 percent for Apple’s iOS.  Android also has the momentum of 550,000 activations per day, growing at 4.4%.   With the acquisition of Motorola, they will own some tremendous assets.  The upside for Goog-rola can be tremendous (APPLE Market Cap: $349B.  2010 revenues were $100B with $32B in EBITDA.  GOOGLE Market Cap: $169B.  2010 revenues were $33.33B with $12.78B in EBITDA).  However, in order to accomplish this, they need to focus on three things:

1. They’ll need to determine how to fully integrate Motorola — quickly
2. They’ll need to learn how to play nice with the media and cable companies
3. Focus on flawless execution and delivery of products – launching devices is a very different game than releasing software – you can’t launch devices to the market in “beta”

Microsoft:

The other winner can be Microsoft.  However, I believe that Microsoft should consider acquiring RIM and “owning” the Enterprise mobility market.  With its current install base and deep entrenchment in large enterprises, they are uniquely positioned to become the leaders.  Also, with the acquisition of RIM, they can also control the end-to-end ecosystem – hardware, operating systems, software and the ecosystem.  At $14B market cap, it’s cheaper than Nokia which is at $22B Market Cap (Microsoft’s is at $202B).  RIM is better than Nokia in smart-phones, where all the future growth is.  Besides, it will be easier to integrate RIM than integrating Nokia.

Amazon:

The third company that can potentially win from this is Amazon, if it starts taking the device business seriously.  While Amazon has done really well with its Kindle reader and is coming up with its own tablets soon, I think that they should actively explore how expand their plays on mobile and TV devices and perhaps launch their own.  I believe that they’re certainly leaving money on the table on the mobile front – if they launch their own devices, they can combine their retail and entertainment offerings with mobile features such as: Location based Services, targeting, etc. to create very powerful services. (AMAZON Market Cap: $88B.  2010 revenues were $40.28B with $1.83B in EBITDA).

Dish Acquires Blockbuster

My views …

Dish Network Corp won its $320 million bid for Blockbuster, Inc. in a bankruptcy auction.  Dish Network claims that through this deal, it will tap the movie rental chain’s online content to strengthen its offerings.

While this deal makes sense for Dish Network in some ways, it comes with a lot of baggage.

• Dish Network, historically has not had strong “Video On-Demand” offerings, mainly because the Satellite Service Infrastructure isn’t as conducive to VoD as a Cable MSO’s infrastructure.  Blockbuster will allow Dish Network to possibly enhance its VoD offering with its “Over-the-Top” play, which will leverage broadband internet, not the Satellite Service Infrastructure.  Dish Network already uses Sling Media’s technology for its own version of “TV Everywhere”, which allows consumers to watch their subscription content anywhere, anytime.

• Dish Network claims that Blockbuster is a stronger national brand than Dish Network, so a combined Blockbuster/Dish Network brand will help Dish Network better compete with Cable MSO competitors (such as Comcast and Time Warner Cable), as well as with its Telco competitors (such as Verizon FiOS).

• Dish Network also claims that having a major national retail presence will also allow it to expand and sell more subscription services to customers.  Given that Dish Network’s foot-print is national, not regional like Cable MSOs, this may make some sense.

However, I believe that in order to realize this vision, Dish Network will have to deal with major challenges:

• While Blockbuster slashed its debt from nearly $1B to $100M under bankruptcy in September 2010, its amount of debt is still quite large.  In addition, under bankruptcy, Icahn and hedge funds that together hold 80 percent of Blockbuster’s senior notes provided another $125 million of debtor-in-possession (or DIP) financing to help it operate while in bankruptcy.

• In addition, Blockbuster has around 1,800 stores. While under bankruptcy, it planned to close 10% of these stores – so far decreasing its amount of stores from around 3,000 to 1,800 - Dish Network will still need to spend considerable amount of time and energy in “rationalizing” the retail part of the business. I believe that in this day and age, it just doesn’t make sense to have 1,800 movie rental stores, no matter what the synergies with Dish Network might be.

• I also believe that while Blockbuster is a strong brand, it doesn’t necessarily equate with digital entertainment.  Most people know Blockbuster as the company that used to rip them off through late fees is the era when they actually rented movies.  It will be very difficult for Blockbuster to compete with stronger brands like Apple and Netflix.

• Finally, while Blockbuster has a strong relationship with Hollywood Studios and may be able to get movies in earlier windows, it’s always going to be about money!  Blockbuster/Dish Network will need to continue to up the ante in an effort to compete with other Digitial Service Providers to get quality content in preferred windows.

While Dish Network will struggle to figure out how to integrate a messy Blockbuster, in the end, Content remains king and Consumers win!

Time Warner Cable’s iPad App

Time Warner Cable launched its Apple iPad app, which allows subscribers to watch some of their channels on their iPad over WiFi, as long as they’re within their home.  Cablevision is also planning a similar app, but will make the entire channel line-up, as well as VOD and DVR programming available to the subscribers.

The primary issue is about which rights are specifically negotiated within the “carriage agreements” between the TV Networks and the Pay-TV service providers including Cable MSOs, Telcos and DBS services.  Some cable networks believe that this violates their existing carriage agreements – they are claiming that the agreements only provide rights to deliver content over “Cable Television”, not streamed to a “Tablet”.  The secondary issue is that Tablet viewing isn’t measured by the likes of Nielsen, so programs consumed over Tablets may not be factored into the programs’ ratings.  Finally, another issue is that TV Networks don’t always buy “Broadband” or “Mobile” rights for the content they offer, which means that in turn, they can be sued by the Studios who provide the content to them. Read more…

News Flash: Kids like Devices

If you were not aware, kids actually like using devices! Thanks to the NYTimes.com for reporting that kids are using devices for multiple functions, including reading eBooks. The sub-headline was – “Kids prefer iPad calculator app, and retire their standard issue abacus to ebay”.  This is not a surprise to most of us that kids will, and, are using devices to do just about anything (including substitute personal communication with record-breaking texting), so why should reading be any different.  This is indeed a truism. The adoption has just been accelerated by the proliferation of devices, ease of use of devices and lower price points. These converging factors were not the catalyst, but just the accelerator for adoption.  Digital kids, young adults (and many adults now) are not nostalgic for the quaint scent of a ruffled books or shelves filled with colorful bindings of reading conquests or intended ones (have you seen the reality series Hoarders). They want control and choice and they want it anyplace, anywhere, anytime; which brings us to the implications for the industry. Read more…

Shahid’s quotes on the Huff Post-AOL deal

Bloomberg

Read the full article here

“With this acquisition, Tim Armstrong is well on his way to transforming AOL into an online editorial-based content company,” Shahid Khan, chairman and chief strategist at MediaMorph Inc., a New York-based digital media-tracking service, said in an interview. “HuffPost gives AOL a very compelling, affluent, educated young audience. It further strengthens AOL’s overall editorial abilities with Arianna in charge.”

Financial Times.com

Read the full article here

“[The deal] does make sense,” said Shahid Khan, a consultant with MediaMorph. AOL will round out “its offering with a well-respected news and politics site, and it rounds out its demographic with a well-educated and younger audience.”

Investors.com / Investor’s Business Daily

Read the full article here

Adding Huffington’s content and Arianna Huffington’s skills in content could help AOL reverse its fortunes, says Shahid Khan, chairman of MediaMorph, a digital media tracking service. ”AOL has had content on their site, but a lot of the content was stale and it needed reworking,” he said.

CTV News Video

Watch the video and read the full article here

Shahid Khan, media expert: A digital media expert says he thinks the move comes from AOL trying to re-build themselves. He explains how in the past, the company has tried generating their own content, but it was very stale.

Sometimes my predictions do come true…

As I predicted a few months ago (see below), a larger media company will acquire the Huffington Post at $300 mill valuation. Today AOL combines its new sites with the Huff post. I believe this is very synergistic merger for a number of reasons:

1)      AOL had acquired a number of niche new sites over the last few months. They did three in one day, altogether doing five or six. The Huff Post acquisition  rounds off its offing by adding content and editorial capabilities around major areas such as politics, current affair, and others. In addition, it further strengthens AOL’s overall editorial abilities with Arianna in charge.

2) The niche channels that Huff Post has such as travel, food, and local content compliments AOL’s niche channels such as technology, African American voices, autos etc.

3) AOL’s strong advertising sales force augments Huff Post’s revenue generating abilities.

4) Huff Post gives AOL a very compelling, affluent, educated, young audience.

5) AOL’s underlying technology abilities as well as its portfolio of targeting and ad sales technologies allows the combined entities to better monetize its audience and content.

With this acquisition, Tim Armstrong is well on his way to transforming AOL into an online editorial based content company.